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#640967 - 11/21/06 10:28 PM PC transfers MMDA rules
Love those Regs Offline
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Joined: Apr 2002
Posts: 292
Southern State
I need clarification on MMDA transaction limits when a person via their PC transfers money from their MMDA to pay a loan at our bank. Is that unlimited since it is to pay a loan at our bank OR does it count in the 6 limit since it is done via a computer? Now, what about a PC transfer moving money from a MMDA to another deposit account at our bank? Unlimited or counts in the 6?
If you have a citation to reference, I would appreciate a link to it.
Thanks for the help! I'm confusing myself way too much....
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Deposits and Payments
#641030 - 11/22/06 04:36 AM Re: PC transfers MMDA rules Love those Regs
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,234
Galveston, TX
You will find your answer in 12 CFR 204.2:

Such an account is not a transaction account by virtue of an arrangement that permits transfers for the purpose of repaying loans and associated expenses at the same depository institution (as originator or servicer) or that permits transfers of funds from this account to another account of the same depositor at the same institution or permits withdrawals (payments directly to the depositor) from the account when such transfers or withdrawals are made by mail, messenger, automated teller machine, or in person or when such withdrawals are made by telephone (via check mailed to the depositor) regardless of the number of such transfers or withdrawals.

So - any transactions to pay a loan will be exempt, but transfers to other deposit accounts through a PC will count against the six.
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#641059 - 11/22/06 01:27 PM Re: PC transfers MMDA rules rlcarey
Kelsey D Offline
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Joined: Aug 2006
Posts: 516
Ohio
Now you've got me thinking. What about transfers to cover an overdraft in another account?

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#641088 - 11/22/06 02:22 PM Re: PC transfers MMDA rules Kelsey D
Anonymous
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Yes, they count towards the 6.

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#641184 - 11/22/06 03:45 PM Re: PC transfers MMDA rules
Kelsey D Offline
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Joined: Aug 2006
Posts: 516
Ohio
That's what I thought, but Randy's citation is confusing me. I didn't know that transactions to pay a loan were exempt. I'm struggling today...I have turkey on my mind!

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#641245 - 11/22/06 04:21 PM Re: PC transfers MMDA rules Kelsey D
John Burnett Offline
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John Burnett
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Cape Cod
So far, so good. Transfers to cover an overdraft in another account will count toward the limit. However, if a transaction account is covered with an overdraft line of credit, transfers from a savings/MMD account to pay down the line of credit will ordinarily not be counted.

I say "ordinarily" because schemes where an overdraft is "routed" through a line of credit and paid off the same day by a transfer from savings/MMDA to the OD line are not looked upon with favor by regulators. They are what they appear to be: attempted end-runs.
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#641268 - 11/22/06 04:36 PM Re: PC transfers MMDA rules John Burnett
Kelsey D Offline
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Joined: Aug 2006
Posts: 516
Ohio
Thanks everyone! I learned something new.

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#642404 - 11/27/06 04:57 PM Re: PC transfers MMDA rules John Burnett
mck401 Offline
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Joined: May 2006
Posts: 1,168
Texas
John, do you think there will be an amendment to Reg D to allow telephone transfer and Online transfer to accounts within the same institution? I am trying to understand why a transfer to pay a debt is allowed but not a transfer from MMDA to Checking??
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#642529 - 11/27/06 07:15 PM Re: PC transfers MMDA rules mck401
John Burnett Offline
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John Burnett
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Cape Cod
The current purpose of the regulation is to permit the Fed to influence/control the money supply. There is a long-standing difference between how transaction accounts and savings accounts are treated. MMDAs were a compromise investment/savings account created in 1982 to help keep funds in the banking system when money market funds] were siphoning them off with high rates.

Congress has tried -- and failed -- for the last several years to mix things up a bit. It tried to allow interest on demand deposits and up to 24 transfers per month from a new interest-bearing transaction account. It did not attempt to mess with the MMDA or the numbers of transfers permitted from savings. So I don't see any momentum for amending Regulation D to make the changes you suggest.
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